A Bank with a Strong Positive Leverage Adjusted Duration Gap

question 42

Multiple Choice

A bank with a strong positive leverage adjusted duration gap can hedge their exposure to interest rate increases by entering into

• A)a currency swap agreement to receive the fixed rate payment.
• B)an interest rate swap agreement to make the fixed-rate payment side of the swap.
• C)a credit swap agreement to receive the floating rate payment.
• D)a commodity swap agreement to make the fixed-rate payment side of the swap.
• E)an equity swap agreement to make the floating-rate payment side of the swap.

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Definitions:

Lifetime Value

The total net profit attributed to a customer over the entirety of their relationship with a company.

Transaction-by-Transaction Basis

Evaluating or managing each transaction individually rather than considering overall performance over time.

Quick Response System

A supply chain management approach designed to speed up inventory replenishment and enhance efficiency.

Sustainable Competitive Advantage

A long-term strategy that allows an organization to consistently outperform its competitors over time, due to unique resources or capabilities.